WA stripped of its AAA credit rating

Business Reporter

Mining powerhouse Western Australia's credit rating has been cut to AA+ amid government spending pressures and its outlook has been revised to stable, ratings agency Standard & Poor's says.

The global ratings agency said the lowering of WA's long-term issuer credit rating from AAA reflected "limited political will" in enforcing the mining state's "Fiscal Action Plan", which was issued as part of WA's 2014 budget.

"While the Fiscal Action Plan ... improves the state’s path, in our view there is likely to be slippage, reflecting our view of limited political will, as evidenced by the early revision of some budget revenue and expenditure measures," S&P said in a statement today.

"As a result, WA’s credit metrics are likely to remain more consistent with an ‘AA+’ rating over the medium term."

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WA Premier Colin Barnett said he was disappointed his state had lost its AAA rating, but said he would not apologise for investing in infrastructure.

“Debt is high and is rising. Why? Because this state is growing,” Mr Barnett said. “We’re investing in hospitals, in schools, in improving our capital city, road projects, regional development and the like, and I don’t apologise for that.

“This is a transformational decade for Western Australia.”

S&P credit analyst Claire Curtin said the state, which has benefited from the mining boom, had seen its short- and long-term outlooks revised to stable from negative as the Liberal government was expected to implement enough of its fiscal plan to ensure that its cash operating balance remains positive.

She said WA could see its rating under pressure if its consolidated cash operating balance falls into deficit and is not supported by a “convincing plan to return to surplus”.

“A cash operating deficit could be a result of revenue pressures, or from a failure to remain committed to sufficient cost-savings. An expectation that debt levels looked likely to breach 120 per cent of consolidated revenues would also likely pressure the rating.”

S&P added that the potential of any upgrade back to triple-A was not expected. The short-term issuer credit rating remained at A-1+.

Among the other states, NSW has a AAA rating from S&P, but is on negative watch. It also has triple-A ratings with a stable outlook from Fitch and Moody’s. Victoria is rated AAA by S&P and Moody’s.

Queensland lost its triple-A credit rating in 2009, and was placed on negative watch by Moody’s last year. Tasmania has a Aa1 credit rating from Moody’s and a AA+ rating from S&P.

ACT’s holds a AAA rating from S&P while Moody's downgraded NT's credit rating to Aa1 with a negative outlook earlier this year.

Australia is one of the few countries in the world to retain its AAA-rating despite the economic turmoil that shock the world during the financial crisis.

with AAP

90 comments

This can't possibly true. Only Labor governments have decifits, debt and lower credit ratings. The economy is always better under a Liberal government. Tony Abbott said so.

Commenter

Mike

Date and time

September 18, 2013, 12:42PM

Yes, and god forbid we don't dare question him.

Commenter

slang maag

Date and time

September 18, 2013, 12:54PM

But Tony Abbott has been spinning propaganda for the last three years. Just watch him emulate his WA mates!

Commenter

Clive

Location

Manly West

Date and time

September 18, 2013, 1:05PM

Wonder how the Kool-Aid tastes now?

Commenter

BoganBarnett

Date and time

September 18, 2013, 1:40PM

You mean to tell me the LNP have lost our AAA credit rating and expect us to believe that it's through "good" policy? Hands up which of you just voted for Abbott. Our resources are being given away by these incompetent fools and we are supposed to be thankful? Unbelievable!!!

Commenter

Fool me once

Date and time

September 18, 2013, 2:52PM

If TA and the Liberals fail, it is time for REVOLUTION.The scourge of this world is PRIVATE CENTRAL BANKING.Credit Ratings Agencies are the Lap Dogs of Private Central Banks.OUR WORLD IS DROWNING IN DEBT.The sooner we cut this cancer from our society, the sooner the birthrights of our ancestors shall be returned to us.

Commenter

The Seer

Date and time

September 18, 2013, 5:03PM

Liberal governments always achieve poor creddit ratings because they refuse to borrow or spend. If we all did that no-one would have a house and no-one would have a job. Consider the 12,000 public servants about to be sacked. That's a minimum $600 million removed from the economy wthat would have been spent on cars, clothing, building products, retail, holidays so the knock on effect is massive. The Libs don't get it. Not now. Not ever.

Commenter

That Abottoir is on the nose

Location

Melbourne

Date and time

September 18, 2013, 6:28PM

Q How do you run somewhere in the middle of a once in a lifetime boom into the ground.

A. Put the Liberals with Spendthrift Lord Colin in charge and let him max the visa out

Commenter

Stevo6210

Date and time

September 18, 2013, 9:17PM

Mike, this can't be true. Barnett & Buzz said that all their election promises were fully costed & fully funded and if you voted for this mob and their new mates in Canberra then you a bloody idiot.twice over.